Correlation Between Settlebank and Kbi Metal

Can any of the company-specific risk be diversified away by investing in both Settlebank and Kbi Metal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Settlebank and Kbi Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Settlebank and Kbi Metal Co, you can compare the effects of market volatilities on Settlebank and Kbi Metal and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Settlebank with a short position of Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Settlebank and Kbi Metal.

Diversification Opportunities for Settlebank and Kbi Metal

0.66

Correlation Coefficient

Settlebank  Kbi Metal

Poor diversification

The 3 months correlation between Settlebank and Kbi is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal and Settlebank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Settlebank are associated (or correlated) with Kbi Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kbi Metal has no effect on the direction of Settlebank i.e., Settlebank and Kbi Metal go up and down completely randomly.

Pair Corralation between Settlebank and Kbi Metal

Assuming the 90 days trading horizon Settlebank is expected to generate 0.63 times more return on investment than Kbi Metal. However, Settlebank is 1.58 times less risky than Kbi Metal. It trades about -0.1 of its potential returns per unit of risk. Kbi Metal Co is currently generating about -0.16 per unit of risk. If you would invest  1,760,000  in Settlebank on August 31, 2024 and sell it today you would lose (259,000) from holding Settlebank or give up 14.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Settlebank  vs.  Kbi Metal Co

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Kbi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kbi Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Settlebank and Kbi Metal

The main advantage of trading using opposite Settlebank and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Settlebank position performs unexpectedly, Kbi Metal can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kbi Metal will offset losses from the drop in Kbi Metal's long position.

The idea behind Settlebank and Kbi Metal Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..